The City of Richmond Successfully Enters the Bond Market - Saves $100 Million
The City of Richmond successfully sold $502 million in Public Utility Revenue and Refunding Bonds of which $169 million was for new money projects and $333 million was to refund existing debt service for interest rate savings.
The cost of funds for the City’s New Money Projects was approximately 3.47%, which is near the lowest cost of funds in several decades. In addition, the City took advantage of the historic low interest rate environment to refund two outstanding bond issues, which will result in the City reducing its existing debt service by roughly $100 million over the next 24 years.
The Bonds were highly rated by all three national credit rating agencies - Moody’s, Standard & Poor’s and Fitch (Aa2, AA, AA respectively).
Wells Fargo, Bank of America, Raymond James and Siebert Cisneros Shank served as underwriters on the financing. Wells Fargo, Bank of America and Raymond James have offices in Richmond. Siebert Cisneros Shank is based out of New York and is the nation’s largest minority owned bond underwriting firm.
“These extraordinary savings underscore the confidence that investors have in owning a piece of Richmond’s future,” said Mayor Dwight C. Jones. “Additionally, as a result of the savings, we’ll be able to help offset operating costs and ongoing debt service related to these transactions.”
David Rose, Senior Vice President and Manager of Public Finance at Davenport & Company LLC, the City’s Financial Advisor, said “As best we can determine, the level of debt service savings is unprecedented for a Virginia Local Government.”
The City’s Director of Public Utilities, Bob Steidel, commented, “The City’s Utility System has experienced consistent credit rating upgrades over the past several years. As a result, the level of savings has been augmented because our credit worthiness has increased.”
“Today’s results serve to confirm that the City’s Utility System is well run and well respected by major investors,” said Chief Administrative Officer Selena Cuffee-Glenn. “We recognize there is no way this result could have occurred unless that was the case.”